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'Ringback' Tones May Be Next Big Thing

By: AP
By: AP

Ring tones are so yesterday. If wireless companies have their way, the next multibillion-dollar surprise in the cellular business will be "Ringback" tones.

Instead of the usual dialing noise which people hear when phoning someone, callers to Verizon Wireless subscribers may soon find themselves listening to a song until the phone is answered.

The service, pioneered by SK Telecom of Korea, is now debuting in California and is slated to be available nationally by mid-2005.

Verizon Wireless, a partnership between Verizon Communications Inc. and Vodafone Group PLC, is charging 99 cents per month plus an annual fee of $1.99 for each Ringback Tone chosen. Other U.S. carriers are said to be mulling a similar service.

Verizon's subscribers can assign specific tunes for different callers to hear, choosing among 2,200 songs from 13 music genres provided by Warner Music Group and Sony BMG Music Entertainment.

The market for ring tones, initially scoffed at by many cell phone users and industry analysts, has ballooned into a huge business, though more so overseas than in the United States.

While global projections for this year's revenues range widely from $2 billion to $4 billion, the U.S. share of that ring tone pie is believed to be less than a tenth of the total. According to the research firm In-Stat/MDR, U.S. ring-tone sales are expected to approach $150 million in 2004, double last year's total.

So far, ringback tones have developed a following in Asia and, more recently, Europe.

SK Telcom, which developed the technology being used by Verizon, introduced its "ColoRing" service in Korea two years ago and has since licensed it to carriers in Vietnam, Singapore, the Philippines and Indonesia.

About a third of SK Telecom's 18 million customers were using the service after the first year, generating monthly revenues of $8 million, according to Michele Mackenzie, an industry analyst for Ovum, a London-based technology consulting firm.

T-Mobile, a unit of Deutsche Telekom AG of Germany, led the way in Europe with the launch of "Caller Tunes" about a year ago. In June, T-Mobile reported 500,000 customers in Britain, Germany and the Czech Republic.

While similar services have been introduced by Vodafone Germany, Telefonica Spain and Tele2 Sweden, ringback revenues for all of western Europe are expected to total just $16 million for 2004, Mackenzie estimates.

Mackenzie and others are dubious ringbacks can duplicate the success of ring tones.

"They're not the easiest thing to describe, and the people paying the money never actually get to hear the ringback tones themselves — which some may consider a tough sell," said Mike Masnick in a recent report for The Feature, an online journal about the mobile Internet funded by cell phone maker Nokia Corp.

"Ringback tones are, essentially, a fashion statement. Their only real purpose is to show off to others who are calling you. The problem, then, is that fashion statements go out of fashion — sometimes very quickly," he said.

In other words, a ringback fad may hearken back to the early days of answering machines, when call after call to friends or family might force you to endure the same recording of a favorite song, joke or life ponderance before you could leave a message after the beep.


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